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Recent VCAT decision of interest

June 10, 2019

A recent VCAT decision considers when a trade contractor, such as a cabinet maker, is required to enter into a major domestic building contract with the owner of land. 

In the case of Plyboard Distributors Pty Ltd v. Apostolopolous [2019] VCAT 573 a cabinet maker was seeking payment for joinery work carried out at the respondents’ house.  This house was described by the respondents as a display home as well as their home.  The respondents traded as Cavallo Homes though at the time of the VCAT hearing that business name had been cancelled.  Interestingly two days after the VCAT decision that business name was re-registered.  The respondents among other things argued that the cabinet maker had breached the Domestic Building Contracts Act by claiming a deposit exceeding the 5% limit and also breached the Building Act by carrying out domestic building work over the value of $10,000 without being registered. 

VCAT considered whether the contract should have been a major domestic building contract.  It noted that the respondents used the business name Cavallo Homes in their communications with the applicant, that one of the respondents was the owner of the site, and that a copy of the building permit had not been produced or any evidence that the respondents had engaged another builder.   Therefore VCAT decided that the respondents as a partnership had been building the house as the registered builder for the second respondent and they had represented that to the applicant.  Therefore the contract was a subcontract and not a domestic building contract and the Domestic Building Contracts Act did not apply.  Also the applicant did not need to be registered as they understood they were subcontracted to a registered builder.   Eventually VCAT found that the respondents had breached the contract and the applicant was entitled to over $53,000 from the respondents.  A counterclaim by the respondents was dismissed.

There are two interesting outcomes of this case.  The first is that the DBDRV was able to conciliate the dispute even though VCAT eventually found that the cabinetmaker had contracted as a subcontractor to a registered builder.   This means that if a builder is building a spec home or similar and owns the site a contractor can use the DBDRV conciliation process.  The second outcome is a reminder that a registered builder building on their own land will not be able to rely on consumer protection laws unless they actually engage another registered builder as the head contractor.  However, if the second respondent had engaged the applicant directly and the first respondent – who was the actual registered builder – had not been involved and used the business name in communications then the outcome may have been very different.  In that scenario, the applicant would have been carrying out domestic building work for an owner who was not registered and they would have been required to enter into a major domestic building contract and be registered as a building practitioner.

For further information, please contact HIA Workplace Services on 1300 650 620.